"We have to recognize that this is going to be extraordinarily
difficult to solve. All of the simple low hanging fruits have
been picked and the presumption that we are going to resolve the
big issue on spending by making a few little twitches here and
there I think is a little naive. If we get out of this with a
moderate recession, I would say that the price is very cheap. The
presumption that we will solve this problem without paying I
think is grossly inappropriate."

On Simpson and Bowles saying that the markets could crash
if a deal isn't made:

"I think it is not only Simpson-Bowles. I think the markets are
getting very shaky. And they are getting shaky because I think
fiscal policy is out of control. And I think the markets will
crater if we run into any evidence that we cannot solve this
problem. And I think the notion that the issue of the impact on
the economy is strictly the spending tax issue, is also the
market. I think we underestimate the extent to which the market
value of assets has a very important impact on real GDP."

Look, the Fiscal Cliff is about one thing: Avoiding spending
cuts, and avoiding tax hikes on everyone.

The U.S. recovery has been remarkable on a comparative basis
precisely for one reason: Because despite all of the rhetoric,
the U.S. has completely avoided the austerity madness that's
gripped much of the world.

Ryan
Avent has a great chart that's going viral today showing how
well the U.S. has done vs. the rest of the world.

But the fiscal cliff threatens all of this progress, because it
represents a moment where for the first time since the crisis,
the U.S. is finally going to take the slow austerity suicide
pill.

This is not to say that the U.S. will blow up on January 1, but
the longer we go into 2013 with no deal to keep taxes low and
restore the spending cuts agreed to in 2011, the more likely it
is that we'll go into recession, and re-begin the deleveraging
that's made this crisis so brutal.

And so here is Greenspan being completely misleading, talking
about how the big challenges now are to find places to cut
spending, rather than to reverse spending cuts that we've agreed
to. He's framing the cliff 100 percent backwards, and so
naturally the public and politicians are going to be totally
confused about the issue at hand.

At some point we need to decide if taxes should be higher. And we
can talk about whether we want to allocate fewer resources to the
aged. But right now there's one task: Preventing austerity.